Malaysian palm oil futures on the Bursa Malaysia Derivatives ended lower on Monday as lacklustre exports in the first 20 days of the month signalled dwindling demand for the edible oil. Exports of Malaysian palm products for June 1-20 inched up 0.4 per cent to 1,074,410 tonnes from 1,070,282 tonnes a month before, a report from cargo surveyor Intertek Testing Services showed, as India and China demand dwindles.

CPO active month September futures are moving on expected lines. As mentioned earlier, we expected potential targets near MYR 2,375-85/tonne range – a potential technical objective in the short-term to be tested. Prices are close to supports at 2,210-20 levels now. While these short-term supports holds, we can expect the upside momentum to continue again in the short-term and retest recent highs at 2,375 or even higher. This is our favoured view. Only a decline below MYR 2,185/tonne, could hint at weakness again, and such a move could revive bearish expectations for a decline lower towards 2,105 levels, which we do not favour presently.

Favoured view expects prices to initially decline and find supports mentioned above and then gradually edge higher again.

We will have to once again review the wave counts, but will wait for a crossover above MYR 2,400/tonne to do that. Till then we will stick to our earlier assessment.

As mentioned earlier, a downtrend again could be confirmed on a close below 2,175 levels. This once again puts the spot light on the MYR 1,700/tonne mark, which we anticipated earlier. We are now tracking a final leg of an impulse in a declining trend with potential targets near 1,850 or even lower to 1,700 levels. Ideally, the next leg of a larger up move could potentially begin from this area. But a direct rise above MYR 2,500 in huge volumes could indicate a turnaround suggesting a possible move to 2,800 later in the year.

RSI is in still the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD are above the zero line of the indicator again hinting at a bullish trend. Only a crossover again below the zero line could hint at a resumption of the bearish trend.

Therefore, look for palm oil futures to test supports initially and then rise again.

Supports are at MYR 2,210, 2,185 and 2,155. Resistances are at MYR 2,270, 2,300 and 2,325.

The writer is the Director of Commtrendz Research. There is risk of loss in trading.

comment COMMENT NOW